My understanding ( having written several times to Faronics) is that the best way to make a system image is to:

(1) thaw
(2) reboot
(3) set the flag
(4) Turnoff the pc rather than reboot
(5) Turn on the pc with the Acronis emergency cd as boot
(6) make the system image

Ok the above works but then so does rebooting in step 4. Also making an image from within windows seems to do no harm and forgetting to set the flag
has not resulted in disaster. The only thing I have not done yet is make an image of a frozen system.

I'm not sure if Faronics are just playing safe or if Acronis is simply just able to handle DeepFreeze ? They did say that not following this procedure with Norton Ghost could put the machine into a loop.